Dubai shipbuilder turns to court on debt deal

AP News

4/2/2012 5:22:36 AM - AP News

Dubai's shipyard operator DryDocks World has filed a claim with a special tribunal in the city-state as part of an effort to push forward its $2.2 billion debt restructuring.

Court records show the Dubai World Tribunal is scheduled to hear a case Monday filed by the company involving Decree No. 57, a law issued by Dubai's ruler in 2009. The company made the filing Sunday.

The legislation allows subsidiaries of state conglomerate Dubai World such as DryDocks World to apply for protection from creditors through the court. It also includes a provision that a restructuring plan approved by two-thirds of lenders can become binding on all creditors.

DryDocks World is expected to release more details of the restructuring later Monday.

On Saturday, the company said a "significant majority" _ but not all _ of its creditors had signed on to the debt restructuring plan.

DryDocks Worlds has been wrangling with lenders for months to hammer out new terms on the debt. The negotiations have been complicated by a lawsuit by one of its creditors, Monarch Alternative Capital, which was seeking about $45 million. A British court ruled in Monarch's favor earlier this year.

By turning to the tribunal, DryDocks World appears to be trying to secure legal approval for its turnaround effort despite the objections of some creditors. Its chairman, Khamis Juma Buamim, said Saturday he is confident the lack of support from a minority of creditors will not affect the restructuring effort.

DryDocks World operates the Middle East's largest shipyard in Dubai, where it builds and repairs ships and oil drilling rigs. It also owns shipyards in Singapore and Indonesia, as well as other Asian businesses including a fleet of more than 100 vessels, including tankers, cargo ships, tugboats and barges.

Its parent company, Dubai World, sent markets reeling in 2009 when it acknowledged it couldn't pay back billions it owed. It signed an agreement to restructure some $25 billion in debt last March, but DryDocks World was excluded from that process.

A panel of three judges from Britain and Singapore preside over the Dubai World Tribunal, which was set up in 2009 to handle cases involving the finances of the debt-laden conglomerate.